According to the figures released today (June 27) by the Census and Statistics Department (C&SD), the average wage rate for all the selected industry sections surveyed, as measured by the wage index, increased by 3.9% in nominal terms in March 2019 over a year earlier.

About 68% of the companies reported increase in average wage rates in March 2019 compared with a year ago. 29% of the companies recorded decrease in average wage rates over the same period. The remaining 3% reported virtually no change in average wage rates.

After discounting the changes in consumer prices as measured by the Consumer Price Index (A), the overall average wage rate for all the selected industry sections surveyed increased by 1.4% in real terms in March 2019 over a year earlier.

As for payroll, the index of payroll per person engaged for all the industry sections surveyed increased by 4.0% in nominal terms in the first quarter of 2019 over a year earlier.

After discounting the changes in consumer prices as measured by the Composite Consumer Price Index, the average payroll per person engaged increased by 1.8% in real terms in the first quarter of 2019 compared with a year earlier.

The wage rate includes basic wages and other regular and guaranteed allowances and bonuses. Payroll includes elements covered by wage rate as well as other irregular payments to workers such as discretionary bonuses and overtime allowances. The payroll statistics therefore tend to show relatively larger quarter-to-quarter changes, affected by the number of hours actually worked and the timing of payment of bonuses and back-pay.

Sectoral changes

For the nominal wage indices, year-on-year increases were recorded in all selected industry sections in March 2019, ranging from 2.8% to 4.9%.

For the real wage indices, year-on-year increases were also recorded in all selected industry sections in March 2019, ranging from 0.4% to 2.4%.

The year-on-year changes in the nominal and real wage indices for the selected industry sections from March 2018 to March 2019 are shown in Table 1.

As for the nominal indices of payroll per person engaged, year-on-year increases were recorded in all selected industry sections in the first quarter of 2019, ranging from 2.4% to 5.2%.

For the real payroll indices, year-on-year increases were also recorded in all selected industry sections in the first quarter of 2019, ranging from 0.1% to 3.0%.

The year-on-year changes in the nominal and real indices of payroll per person engaged for selected industry sections from the first quarter of 2018 to the first quarter of 2019 are shown in Table 2. The quarterly changes in the seasonally adjusted nominal and real indices of payroll per person engaged between the first quarter of 2018 and the first quarter of 2019 are shown in Table 3.

Commentary

A Government spokesman noted that nominal wages sustained solid year-on-year growth across most industries in March 2019, thanks to tight labour market conditions. After discounting for inflation, real wages continued to see improvement, including those of lower-paid workers.

Payroll per person engaged, which covers discretionary bonuses and other irregular payments, also continued to record solid year-on-year growth in the first quarter of 2019. Payroll increases in most industries remained solid, though import/export and wholesale trades, and retail trade saw relatively moderate payroll growth amid subdued performances of the respective sectors.

The spokesman added that the stable labour market and the uprating of Statutory Minimum Wage since May 2019 will likely render support to wage growth in the near term, especially so for the grassroots workers. Yet, the Government will monitor the situation closely, in view of the various external headwinds facing the local economy.

Other information

Both wage indices and payroll indices are compiled quarterly based on the results of the Labour Earnings Survey (LES) conducted by the C&SD.

Wage statistics are conceptually different from the payroll statistics. Firstly, wage rate for an employee refers to the sum earned for his normal hours of work. It covers basic wages and other regular and guaranteed allowances and bonuses, but excludes earnings from overtime work and discretionary bonuses, which are however included in payroll per person engaged. Secondly, the payroll index of an industry is an indicator of the simple average payroll received per person engaged in the industry. Its movement is therefore affected by changes in wage rates, number of hours of work and occupational composition in the industry. In contrast, the wage index of an industry is devised to reflect the pure changes in wage rate, with the occupational composition between two successive statistical periods being kept unchanged. In other words, the wage index reflects the change in the price of labour. Thirdly, wage index only covers employees up to the supervisory level (i.e. not including managerial and professional employees), whereas payroll index covers employees at all levels and proprietors actively engaged in the work of the establishment. Because of these conceptual and enumeration differences between payroll and wage statistics, the movements in payroll indices and in wage indices do not necessarily match closely with each other.

It should also be noted that different consumer price indices are used for compiling the real indices of wage and payroll to take into account the differences in their respective occupation coverage. Specifically, the Composite Consumer Price Index, being an indicator of overall consumer prices, is taken as the price deflator for payroll of workers at all levels of the occupational hierarchy. The Consumer Price Index (A), being an indicator of consumer prices for the relatively low expenditure group, is taken as the price deflator for wages in respect of employees engaged in occupations up to the supervisory level.